May 26, 2005
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On the cover: Photo by Bob
Sly as a
FOX: How Fox 29 dodged FCC rules to build a local broadcasting
by HANK SIMS
A FEW WEEKS AGO, Fox 29 began
running new commercial designed to advertise the wares
now offered by Eureka Television Group, the company that owns
Backed by thumping electronic
music, the self-congratulatory spot highlights the networks and
shows that Eureka Television brings to Humboldt County. Fox --
American Idol, The O.C., The Simpsons. CBS -- CSI, Survivor.
UPN -- the Oakland A's, the Sacramento Kings, America's
Next Top Model. The WB -- 7th Heaven, The Gilmore Girls.
And Univision -- international soccer, Cristina and
scores of Latin American soap operas.
The ad was rolled out to mark
Eureka Television's takeover of local CBS affiliate KVIQ-TV (Channel
6) late last month, after a protracted battle at the Federal
Communications Commission. The company's corporate parent --
Sainte Partners of Modesto -- was not allowed to buy KVIQ outright,
as it had hoped, but it was able to arrange a deal through a
third party that gave it the right to effectively operate the
station, as well as to handle its advertising accounts. Between
Fox and CBS, Eureka Television now has rights to eight of the
10 highest rated shows in the country, as ranked in recent A.C.
But the ad also gave a taste
of some of the new programming that locals who depend on their
rabbit-ear antennas will soon be able to enjoy along with their
cable-wired neighbors. Eureka Television has been the local outlet
for the Spanish-language network Univision for more than a year
now, selling ads that are inserted into the network's local Cox
Cable feed. Earlier this year, it acquired rights to do the same
for the two smaller English-language networks, UPN and the WB.
And in a couple of weeks, the company also will start broadcasting
UPN and Univision over the airwaves, on channels 31 and 33 respectively,
with the WB possibly to follow.
All this might seem a bit perplexing
to someone who remembers the battles over the FCC's plan, announced
in the summer of 2003, to relax media ownership rules.
A great hue and cry spread across
the nation when the commission proposed to allow, for the first
time, a single company to own two broadcast television stations
in the same region. Groups ranging from the National Rifle Association
to Code Pink, a women's antiwar coalition, protested the change,
saying the result of the proposed new rules would be to reduce
the number of voices on the air. A year later, a federal appeals
court overturned the FCC's proposal and sent it back to the commission
The commission has not yet acted
on the court's order -- as it stands, the rules on media ownership
are the same today as they were before June 2003. So how is it
that Eureka Television can run not one or two but five broadcast
stations in the Humboldt County market?
Answer: By hewing very, very
closely to the letter of the law.
Blue Lake challenge
When Sainte Partners first made
its bid for KVIQ -- then owned by Ackerley Media Group, a subsidiary
of broadcast giant Clear Channel -- in March 2004, it asked the
Federal Communications Commission to grant it special permission
to own two stations in the same market. The commission only grants
such permission -- known as a "duopoly waiver" -- in
certain, extreme circumstances. For one, an applicant to buy
a second station must demonstrate that no other potential buyers
exist. Also, one or both of the stations in question must be
deemed to be on the verge of financial failure.
Sainte's waiver application
quickly drew opposition from an unlikely quarter -- the Blue
Lake Rancheria. The local tribe, which has launched an aggressive
business development strategy since opening the Blue Lake Casino
in 2002, argued to the FCC that Sainte's waiver application did
not past muster on several counts. In legal papers filed with
the commission, the rancheria criticized the financial information
that Sainte and Clear Channel provided in their application,
saying it did not conclusively demonstrate that the stations
were close to going bust.
The rancheria also said that
there was another legitimate buyer who wished to purchase KVIQ,
one that did not already operate in the market -- the Blue Lake
Rancheria itself. The tribe said that it had contacted Ackerley
when the station first went on the market, and in its legal briefs
it reiterated its desire to buy the station.
In a recent interview, Eric
Ramos, the rancheria's chief financial officer, explained why
owning a TV outlet in the Eureka market would have been a good
business bet for the tribe.
"You hate to always link
one of your businesses to another business, but we are already
a major purchaser of advertising in Humboldt County," he
said, referring to the Blue Lake Casino's large promotional budget.
If the rancheria owned a media outlet, it could have spent some
of that money on itself.
With the rancheria's objections
on file, Sainte's application lingered at the FCC for several
months, with attorneys for both sides firing legal arguments
back and forth. Then, in December, an FCC staff decision in an
unrelated case broke the logjam.
Liz Tieck, a Eureka Television master control operator, mixes
the signal for
CBS affiliate KVIQ, which the company acquired late last month.
precedent in Duluth
In May 2004, just a couple of
months after Sainte filed an application to take over KVIQ's
broadcast license, the New York-based Granite Broadcasting Corp.
and the Malara Broadcast Group of Florida filed an application
to acquire KDLH-TV in Duluth, Minn. In their application, the
companies made clear that Granite -- which already owned a station
in the Duluth area -- would be responsible for running the day-to-day
operations of the station, including controlling the television
broadcast and handling advertising sales. Malara's responsibilities,
apart from simply owning the broadcast license, would be minimal.
In addition, the terms of the agreement gave Granite the right
to buy out Malara if a future change in FCC rules made it legal
for the company to do so.
Two other stations in the Duluth
area protested the proposed deal. They argued that it would violate
the spirit of the commission's regulations on dual ownership,
in that Granite would have such a strong interest in the station
that they in fact "owned" it, for the FCC's purposes
-- if not on paper then in reality. In spite of their objections,
an FCC staff decision in December approved the transaction.
A couple of weeks later, with
its KVIQ application still stalled, Sainte Partners reformulated
its proposal to reflect the Duluth ruling. It abandoned its own
application to buy the station, transferring rights to Raul Broadcasting
of Eureka, a hitherto unknown entity owned by Santa Barbara broadcaster
Raul Palazuelos, a friend of Sainte Partners owner Chester Smith.
In its own reformulated application with the FCC, Raul Broadcasting
proposed a deal mirroring the relationship formed by Granite
and Malara in Duluth. Raul Broadcasting would own the FCC license;
Eureka Television would do nearly everything else.
Charles Naftalin, a Washington,
D.C., attorney who represented the stations that protested the
Duluth deal, said last week that arrangements like the one worked
out between Raul Broadcasting and Sainte Partners were just what
he feared would happen when the ruling in his own case was issued.
"We've taken the position
that in allowing this kind of transaction the FCC is setting
up a blueprint for stations in small markets to make an end run
around the ownership rule," he said. "We think they
crossed the line that the FCC draws for local common ownership
arrangements. Their business, financial and personal arrangements
are so close as to represent dual ownership."
And though the FCC's staff approved
the Duluth deal, Naftalin and his clients have appealed the decision
to the full commission. If the commission decides to reverse
the deal, Naftalin said, other companies who have since followed
the "Duluth model" -- he knows of one other, in Rochester,
Minn. -- may stand to see their own merger deals reexamined and
Ramos said that he has no hard
feelings toward Eureka Television, despite the fact that the
rancheria spent upwards of $15,000 on legal representation. But
he did speak wistfully about the kind of programming he said
he wanted to bring to the community: local news, locally produced
history programs and Native American-themed shows.
"If I feel bad about it,
it's for a couple of reasons," he said. "No. 1, it's
few versus many voices in the community. No. 2, we could have
done a lot of things that other people in the market haven't
done. Maybe we'll get a shot someday."
stations, big coverage
With the consummation of the
deal late last month, Eureka Television took over operation of
KVIQ in almost every particular. Its sales staff now handles
KVIQ accounts. Its master control operators mix the station's
signal, putting network shows, syndicated programming and local
commercials and public service announcements over the station's
That's not all they're doing,
though. Since acquiring the rights to the three smaller networks
-- UPN, the WB and Univision -- they've also been selling ads
and running the switchboard for those stations. Right now, the
three networks run only on cable, for which the FCC has a much
smaller regulatory role. Cable is a different world. Just as
characters on HBO shows like The Sopranos or Deadwood
can curse with impunity, without incurring FCC fines, so can
companies like Eureka Television sell ads for as many cable channels
as they like without fear of running into an FCC limit.
However, Eureka Television has
been testing its new transmitters for UPN and Univision, and
those stations are scheduled to hit the airwaves full-time next
month. And in putting these other stations on the air, Eureka
Television is once again sticking to the strict letter of FCC
In 1982, the FCC created a new
class of broadcasting license for something it called "low
power television," or LPTV. Regulations for LPTV are in
some ways stricter than regular television broadcast licenses
-- broadcasters may transmit at a maximum of 1,000 watts of power.
In some ways, though, the regulations are looser. Specifically,
there is no limit on the number of low-power stations a single
owner may operate.
And "low power" is
something of a misnomer, at least as far as the local market
is concerned. Coverage maps available on the FCC's Web site show
that the signal from Eureka Television's low-power transmitters,
which are located at the company's broadcast tower in Kneeland,
will reach from Trinidad to Rio Dell, and inland nearly to Willow
This map, adapted from ones available on the Federal
Communications Commission's website,
show the reach of two of Eureka Television's broadcast signals.
The dotted line represents Fox 29, a "high-power" station;
the dashed line
represents UPN 31, a "low-power" station. Both stations'
from the company's Kneeland transmission tower, marked here with
"Our low power is as powerful
as our high power," said Don Smullin, Eureka Television's
general manager, in an interview last week. [photo below right]
The difference, he explained,
lies in the protections offered by the FCC. Eureka Television's
"high power" stations -- KVIQ and Fox 29 -- may not
be disturbed by signals emanating from adjacent markets. With
low power broadcasting, the regulation of the frequency is less
stringent. But in an isolated market like Humboldt County, low
power broadcasts are unlikely to rub up against other signals
UPN and Univision hit the airwaves full-time next month, Eureka
Television will own four of the six commercial broadcasting stations
in the Eureka area. If the WB follows the other Eureka Television
stations to the air, that will change to five out of seven.
Such market domination would
seem to have competitors running scared, especially in a small
market such as the Eureka area. (Nielsen ranks Humboldt County
192nd in size, out of 210 broadcast areas in the United States.)
But last week, representatives from KIEM and KAEF, affiliates
of NBC and ABC, respectively, said that they weren't yet concerned
about the potential impact on their businesses.
"I don't think it will
have much effect at all," said Bob Browning, KIEM's general
manager. "Until their plans become more clear, we wouldn't
see that much of a difference in terms of the impact on the market."
Sarah Smith, who runs KAEF from
her office at the channel's sister station in Redding, said that
she was focused more on improving her own product, which will
soon include the popular Martha Stewart morning show.
"With products like [reruns
of] Friends and ABC's lineup, we've got a good base to
start from," she said. "So I'm not nearly as concerned
about what the competition is doing, I'm worried about what we're
grab or local commitment?
For Don Smullin, the rapid growth
of the company he heads offers tremendous benefits to area residents,
no matter what critics of media consolidation may say.
One of the arguments made by
backers of the FCC's proposed 2003 changes in media ownership
regulations was that by allowing stations to merge, they created
a stronger, more financially viable operation that could provide
greater service to local communities.
Smullin said that is exactly
what has happened with Eureka Television's acquisition of KVIQ
and its expanded programming lineup. Before, he said, who was
offering the sports lineup that his UPN outlet will soon be broadcasting
throughout the area? Who put Spanish language programming out
over the air, a tremendous feat for such a small market? Only
his boss' commitment to the community made such services now
possible, he said.
"This is unique to Chester
Smith," Smullin said. "He had a choice between running
away, like [former KVIQ owner] Clear Channel did, or investing
more money in the market."
Smith did not return a call
seeking comment on this story.
In regard to Ramos' ambitious
plans to produce a variety of in-depth local programming, Smullin
said that it's easier to dream about such things than to actually
do them -- and with a lifetime in broadcasting behind him, he
knows how difficult and costly television production can be.
Smullin said that he hopes that Eureka Television would soon
get a news broadcast together -- KIEM is the only station to
currently offer local news -- but that it would likely be dependent
on whether or not the old KVIQ building, which is infested with
a toxic mold, can be salvaged.
But Smullin said that
whether or not the company is able to get a news operation together,
it has a demonstrated commitment to community service and local
operation. That's a sentiment echoed by Dave Silverbrand, the
former KVIQ newsman who now serves as the station's general manager.
Silverbrand, who works directly
for Raul Broadcasting, now shares offices at the Eureka Television
building on Seventh Street in Eureka. He said that he had long
been dismayed by the declining reputation of the station, which
in the end employed only a few people locally, with the programming
piped directly into the area from Salinas.
"My job now is to rebuild
the image of Channel 6 in this community," he said.
Silverbrand said that there
had been many instances in the past where he heard back from
advertisers upset that they could not find anyone who could discuss
their spots or their bills. Calls to the Salinas headquarters
of the station got lost in the shuffle, he said.
That is something Smullin is
determined to avoid.
His family was one of the first
in the county to jump into broadcasting -- first with radio,
when that was the hot new technology, and then with television.
He noted that advertisers often call him at home, on weekends,
when they have a problem.
Down the street, things are
"What's sad for me is to
go down to ABC," Smullin said, meaning the KAEF building
a few blocks from his own offices. There, he said, you can still
see his father's name etched on the cornerstone of the building,
alongside the date that the Smullin family founded the station,
which is currently owned by a Wichita, Kan., company called Bluestone
License Holdings, Inc. It's a large building, but you can count
the number of people who work inside it on the fingers of one
hand. Everything else is done remotely, from Redding.
That's perfectly legal under
FCC rules, too.
APRIL 28, 2005: IN THE NEWS: "KVIQ changes
JULY 22, 2004: IN THE NEWS: KVIQ sale on hold
MAY 20, 2004: IN THE NEWS: "Bold bid: Blue
Lake Rancheria competing for KVIQ"
APRIL 1, 2004: WEEKLY WRAP: "KVIQ-TV bought"
JAN. 17, 2002: IN THE NEWS: "And then there
OCT. 11, 2001: IN THE NEWS: "KVIQ sale announced"
JUNE 29, 2000: COVER STORY: "More news, more
often! Stations battle for ratings, revenue"
JAN. 20, 2000: COVER STORY: "Making magic"
NOV. 25, 1999: IN THE NEWS: "Neighbors protest
DEC. 10, 1998: NEWSBRIEFS: "Channel 3 debuts
NOV. 12, 1998: NEWSBRIEFS: "Humboldt in media
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